Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 596.0765

596.0765 Wood Chips Obtained from Burnt Forest. A taxpayer contracts as an independent contractor with land owners for salvage operations on timberland. These salvage operations occur after the land has been subject to a controlled burn, or where a forest fire is caused by natural means, accident, or arson. The taxpayer chips out stumps and other materials not consumed in the burn. The taxpayer then sells the chips.

There is no material difference between the case when the wood chips are harvested following a planned burn versus an unplanned burn. Clearing of undergrowth to prevent fires and thinning of new growth or promotion of growth are "forest products operations." Management of the forest includes both the conducting of planned burns and the conducting of operations in response to fires caused by natural means, accident, or arson. Thus, the wood chips are a waste byproduct with respect to the forest products operations conducted by the owners of the land. It is irrelevant under section 6358.1 that the retailer of these chips is an independent contractor of the land owner rather than the land owner itself. The taxpayer's sales of wood chips to be used as a fuel source in lieu of oil, natural gas, and coal are exempt from tax under section 6358.1. 10/31/96.